September 18, 2018 / 8:16 AM / 8 months ago

UPDATE 2-Indonesia issues new rules for commodity exporters as rupiah slides - trade ministry

    * Indonesia issues letter of credit rules on commodity
    * Government to require new documentation from onshore banks

 (Add details of commodities)
    By Bernadette Christina Munthe
    JAKARTA, Sept 18 (Reuters) - Indonesia has laid out new
rules for commodities exporters to guarantee funding for
shipments through Indonesian banks or branches of foreign banks
in the country, the trade minister said on Tuesday, part of a
bid to prop up the ailing rupiah.
    The Indonesian currency has fallen about 9 percent
versus the dollar this year, caught up in broader selling of
emerging market assets. 
    The trade ministry said the new regulation requires
exporters of some natural commodities to acquire letters of
credit when making shipments issued either by Indonesian banks
or onshore branches of foreign ones. 
    Enggartiasto Lukita also told reporters that exporters of
commodities such as palm oil and coal will be required to keep
half of their proceeds onshore for a minimum of six months and
convert them to rupiah.
    The conversion requirement will be regulated in a separate
rules by the Finance Ministry or by the central bank, Oke
Nurwan, a director general at the Trade Ministry, said. 
    However, the central bank said no such plans were in place.
When asked about the move, Bank Indonesia Deputy Governor Mirza
Adityaswara said there were currently no plans requiring
exporters to keep earnings onshore and convert them to rupiah.

    The regulation on letters of credit will take effect 30 days
after it was ratified on Sept. 7. It will provide for some
exemptions for certain export contracts but exporters who fail
to fulfil the requirement may lose their export permits, the
Trade Ministry regulation said.     
    Indonesia's central bank and government have taken or
unveiled a series of moves to support the rupiah this year.
    Since mid-May, Bank Indonesia has raised its benchmark
interest rate by 125 basis points. President Joko Widodo has
announced steps to cut imports, in a bid to contain the current
account deficit.
    On Tuesday, the rupiah strengthened to 14,850 per dollar
from 14,915 before the announcement of the regulation on letters
of credit and foreign exchange conversions.
    Earlier on Tuesday, amid renewed pressure due to Sino-U.S.
trade tension, the Indonesian currency hit 14,930 per dollar,
near its weakest level since 1998. 
    The table below shows Indonesia's top commodity exports by
value in 2017, according to data from Bank Indonesia. Amounts
shown are in U.S. dollars.
  1                       Coal    20,445,043,740
  2                  Palm oils    18,512,908,040
  3        Base metal products     9,493,976,080
  4     Natural Gas (incl LNG)     7,994,557,790
  5           Processed rubber     7,235,893,440
  6                  Crude oil     5,267,880,240
  7                  Chemicals     4,611,230,660
  8   Paper and paper products     3,877,961,490
  9    Processed wood products     3,756,482,560
 10                 Copper ore     3,439,732,010
 11           Nonmonetary gold     1,880,792,110
 12          Shrimp and prawns     1,543,894,230
 13               Oil products     1,439,359,430
 14               Coffee beans     1,175,624,770
 15                     Spices       568,047,960
 16                 Nickel ore       155,189,470
 17                     Cement       128,604,370
 18                        Tea        88,171,420
 19                        LPG        75,796,550
 20                    Bauxite        66,433,140
 21                    Tobacco        55,546,990
 22                Cocoa beans        55,522,330

 (Reporting by Bernadette Christina Munthe; Additional reporting
by Maikel Jefriando, Fergus Jensen; Writing by Fransiska Nangoy;
Editing by Richard Borsuk and Jan Harvey)
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